The government describes it as the “biggest upgrade to workers’ rights for a generation” – but what could the rather dry sounding Employment Rights Bill mean for you? The answer is possibly quite a lot.
The details of the long-awaited legislation were finally announced by the government today. And the changes it intends to usher in are certainly significant. Although don’t expect to see any differences just yet.
Amid the raft of 28 proposed changes, it promises improved pay for many by the abolition of age-bands for the minimum wage – which will mean a wage hike for youngsters – an end to zero-hour contracts and fire-and-rehire practices (where staff are made redundant and then offered new contracts on poorer terms) and action to close gender pay gaps.
In addition, there will be a more positive approach to flexible working – offering it as a default where it is practical to do so.
What’s more, the Fair Work Agency will be established to ensure workers’ rights are enforced.
But it has not been universally applauded. One Kent business organisation has described the plans as “clumsy, chaotic and poorly planned”.
Perhaps the most significant changes are to what it refers to as ‘day one’ rights.
These include employees being able to pursue unfair dismissal from their first day on the job.
Currently, to take such action requires you to have been on the books for two years. There will be some caveats – including an agreed statutory probation period during which there will be options to cease the employment if it’s not working out – which will be ironed out during a consultation period into the proposals.
In addition, paternity and parental and bereavement leave will be introduced from the first day of employment. Maternity leave is already a ‘day one’ right, but fathers would previously have had to work in a job for at least one year to take advantage.
Statutory sick pay will also be strengthened, removing the lower earnings limit for all workers and cutting out the waiting period before it kicks in.
But it will also mean employers having to adapt to a host of new legislation – if and when it passes all the Parliamentary hurdles which lie ahead of it – and potentially losing some of the flexibility in their workforce which they have come to expect.
Richard Oldfield, chairman of Faversham brewers Shepherd Neame, said: “In the short term we are concerned by proposed labour market regulation and anticipated higher costs of employment and logistics.”
It’s certainly one which the hospitality sector, in particular, will need to be alert to. Its seasonal approach makes it more vulnerable to changes which could see it forced to offer steady contracts if those on zero-hour contracts are working regular hours and want something more secure.
After the shocks of the pandemic, Brexit and inflation, that flexibility has become essential to help them ride the waves of economic uncertainty.
Kate Nicholls is chief executive of UKHospitality, which represents the sector. She said: “These changes are not without cost. That’s why the government should take its time to get the details right, through close consultation with businesses to avoid unintended consequences.
“Rushing to introduce measures too quickly would be the wrong thing to do and would increase the chances of inflicting damage to sectors like hospitality, an employer of 3.5million people and a provider of some of the most flexible roles in the economy.”
Despite her doubts, she hailed the bill as “striking the right balance” but added: “Working with business groups and unions to strike a balance for the good of businesses and workers alike will be critical to the success of this bill.”
Abigail Brightwell is a senior associate at law firm Brachers – which has offices in Maidstone and Canterbury – and works within its employment team.
She says: “For those on zero-hours contracts, there will now be the ability to request a guaranteed hours contract if the worker wants it. So, once further details are announced, it could be that people can still work on a zero-hours contract where it suits both sides.
“But it is something which could potentially cause employers to have to reassess their arrangements.
“Employers have been waiting to see what was released today with quite a bit of anticipation amid all the speculation.
“From what the the government has released today, it seems they are intending to strike a balance between workers’ rights and the interests of employers and businesses.
“The changes are going to be subject to a period of consultation, but this is still going to involve significant changes.”
But it has faced criticism from some business organisations.
Tim Aker is development manager of the Federation of Small Businesses (FSB) in Kent and Medway. He slammed the proposals: “For the past year, business confidence in the South East has fallen quarter by quarter. Today’s announcement will not help.
“This legislation is rushed job, clumsy, chaotic and poorly planned – dropping 28 new measures onto small business employers all at once leaves them scrambling to make sense of it all. Beyond warm words, it lacks any real pro-growth element and will increase economic inactivity, seriously jeopardising the government’s own 80% employment target.
“Plans to give day one unfair dismissal rights to new employees will add to the risks associated with hiring people. That increased risk will inevitably deter small employers from taking on new people, for fear of facing an employment tribunal simply because a new recruit turns out to be unsuited to the role.
“That’s bad for jobs, and a barrier to growth and investment. A vague reference to a statutory probation period, with no detail of what that would look like, won’t reassure small employers.”
The plans have been formulated after much consultation with trade unions and business leaders. Plans by the previous Conservative administration to limit union powers have, perhaps unsurprisingly under a Labour government, been scrapped.
Paul Nowak is the general secretary of the Trade Unions Congress (TUC). He welcomed the bill. He explained: “After 14 years of stagnating living standards, working people desperately need secure jobs they can build a decent life on.
“Driving up employment standards is good for workers, good for business and good for growth. It will give workers more predictability and control and it will stop good employers from being undercut by the bad.
“While there is still detail to be worked through, this bill signals a seismic shift away from the Tories’ low pay, low rights, low productivity economy.”
Deputy Prime Minister Angela Rayner said: “This government is delivering the biggest upgrade to rights at work for a generation, boosting pay and productivity with employment laws fit for a modern economy. We’re turning the page on an economy riven with insecurity, ravaged by dire productivity and blighted by low pay.
“The UK’s out-of-date employment laws are holding our country back and failing business and workers alike. Our plans to make work pay will deliver security in work as the foundation for boosting productivity and growing our economy to make working people better off and realise our potential.”
Business Secretary Jonathan Reynolds said, as is typical with employment legislation, further detail on many of the policies in the bill will be provided through regulations after Royal Assent is given.
He added: “We expect to begin consulting on these reforms in 2025, seeking significant input from all stakeholders, and anticipate this meaning that the majority of reforms will take effect no earlier than 2026.
“Reforms of unfair dismissal will take effect no sooner than autumn 2026.”
